A consumer group dedicated to reducing tax says recent fiscal changes introduced by the government will end up hurting private rental sector tenants and should be modified or scrapped.
The TaxPayers’ Alliance says the three per cent stamp duty surcharge on buy to let and holiday home purchases will help some prospective buyers but will hurt tenants in rented accommodation.
The reduction in mortgage interest tax relief, recently detailed by the government, will also advantage prospective buyers at the expense of tenants, while it and the SDLT surcharge combined will “distort housing markets, with implications for incomes, employment and overall welfare.”
The TaxPayers’ Alliance report into housing says these tax hikes make Britain’s complex tax system even more complicated and distort ownership structures, while other policies such as increasing the cost of houses in multiple occupation licences and introducing landlord licensing schemes – imposed enthusiastically by many local councils – will also end up as additional costs for tenants.
The group instead recommends that the stamp duty surcharge and mortgage interest tax relief changes should be scrapped, saying: “These are regressive measures which add complication to a hugely complex tax system, hinder labour mobility and are economically damaging.”
It wants all other property-related stamp duty rates halved immediately and ultimately abolished, stating: “Stamp duty is a disastrous and unfair tax which leads to the misallocation of housing stock and leads to lower incomes and higher unemployment than necessary. It doesn’t even raise much revenue, once dynamic effects are fully accounted for.”
The TA also says some Green Belt planning classifications should be lifted and taller, denser residential construction should be allowed in urban areas, suggesting: “Pressure needs to be taken out of the housing market by making land available for development less rare and less expensive to build on.”
It says that declassifying five per cent of the Green Belt around London “would allow the city to expand by almost a sixth.”